annual report 2011-12 - Heavy Engineering Corporation Limited

ANNUAL REPORT 2011-12
4. Internal Controls
In our opinion and according to the information and explanations given to us, and on the
basis of test and checks carried out during the course of Audit there is adequate internal
control system commensurate with the size of the company and nature of its business
relating the purchase of inventory and fixed assets and for sale of goods and service, But
there are certain areas where internal controls needs improvement.
Some of the major areas where internal control system in operation needs to be
strengthened strictly adhered to are as follows in our opinion:-
(a) The Company has substantial LD due to non-adherence to delivery schedule.
(b)
Idle time of machines is high as the labour for these are not adequate.
5. In respect of contracts or arrangement entered in the register maintained in pursuance of
Section 301 of the companies Act 1956, to the best of our knowledge and according to
the information and explanation given to us:
(a) The particulars of contracts or arrangements referred to Section 301 that needed to
be entered in the register maintained under the said section have been so entered.
The transactions made in pursuance of such contracts or arrangements have been made
at prices which are reasonable having regards to the prevailing market prices at the
relevant time.
6. Acceptance of deposits from Public
In our opinion and according to the information and explanations given to us, The
company has not accepted deposits from the public within the meaning of section 58
AA or any other relevant provisions of the Companies Act, 1956 and the rules framed
there under.
7. Internal Audit System
Internal Audit of the company was carried out by an outside Chartered Accountant Firm
during the year, however considering the size of the company and nature of its business;
it needs more coverage of financial transactions.
8. Cost Records
As explained to us by the Management, the Central Government has prescribed
maintenance of Cost records under section 209(1) (d) of the Companies Act, 1956 from
financial year 2011-12 for the products of the Company. Currently, cost records are
maintained by an outside Cost Accountant Firm.
Noted
(a) The dearth of working capital, effective
manpower and frequent break down of old
machines are primarily responsible for delay in
execution of order within the delivery schedule
which leads to recovery of LD by customer.
However effective monitoring is being done
for minimizing the delayed delivery/dispatch
of goods to customer.
(b) Action is being taken for recruitment of fresh
technical Workers to avoid idle time due to
non availability of adequate work force.
Noted
Noted
Noted
Noted. Already covered vast areas like Plants,
Projects, Hqrs, Township, Hospital, Transport,
Branch Offices,’ HTI, Transit Camp to the extent
possible. The internal Audit work for 2011-12 was
started from September, 2011
Outside Cost Accountant Firm has been engaged for
preparation of compliance report as required under
Cost Accounting record Rules 2011.
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